I quite liked the 20th century character storyline. It may not be a great fit tonally with the Romulan story, but the episode still works perfectly fine for me.
Plus the Romulan threat kind of helps reinforce just how silly and ridiculous most of their 20th century concerns really are-- which I think was probably the point.
But why make that A plot, when the Romulan stuff and the growing, yet unknown threat of the Borg is far more interesting? If they really wanted to do that stuff with the 20th century characters, they should spun that off into its own episode and have the season finale be solely about the Romulans and this new threat. As it stands, the Romulans consider Picard's request for an alliance for about 15 seconds, agree, change their mind, insult Picard and fly off. It seems like the stuff with the Romulans and the outposts is short changed to make way for more highjinks with people from the 20th century.